When it comes to growing value in the investment space, renowned fintech technologist and financial services consultant John Campbell is a big believer in the power of business vision and strategic partnerships. These aspects are especially relevant when it comes to SMEs (small and medium-sized enterprises) that require systems, skills, and mentorship in order to grow.
In this Q&A interview, John and Frikkie van Loggerenberg put their heads together to shine a guiding light on how technology, experience, and an edged business skill set can support SMEs to achieve higher market valuations; a critical factor that makes private equity an attractive investment option.
What challenges do you face when building new products?
John Campbell: That first stage of dealing with non-believers can be really challenging – especially when building cutting-edge stuff like SaaS products.
One of the biggest challenges is convincing people that the product you’ve built is of value. If it’s too way out, uptake is slow. But those products are the really nice ones to build. I’ve almost gotten to a point where, if I come up with a new product concept or business idea, and people like it, I tend to think it’s probably a bad idea.
I feel for most people going through that phase, because you can become dissuaded very quickly. Yet, every business that you build gives you the confidence to not get discouraged next time. Eventually, you get quite hardened and perhaps a bit more polished in communicating what it is you’re trying to solve.
How important is having a vision for your product or business?
John Campbell: Having a vision is absolutely paramount, because it serves as a strategic plan for success. I’ve met people trying to build a business because they think it’s a good idea or because they need to make money.
If you’re trying to build a business because you need money, it’s very hard. I think it’s impossible. The vision to make money is not a vision. Robbing a bank is probably an easier way of getting to that vision.
What are your top tips for building a more investable product?
John Campbell: In my line of work, it’s about making things easier for people. A big part of that is Lean Startup 101 kind of stuff. Some tips include:
Tip 1: Don’t ask the obvious questions
Look for the X factor. People don’t always describe what their problem is. That’s why it’s important to ask the right questions and listen to feedback while constantly analysing data and testing the solution.
Tip 2: Don’t become arrogant with success
Just because you’ve hit the mark before doesn’t mean you’ll do so again. There might be some projects where you’re required to be very hands-on. Other projects might require you to be very hands-off. Learn to know the difference and trust your team.
Tip 3: Build what your customer needs
Empathy only stretches so far. Don’t pretend you know everything. In fact, pretend you know nothing. Just listen to the customer and understand what it is they’re saying.
What is the biggest risk when building a new product?
John Campbell: Many of the products I’ve built over the years were financial services products. So, reputational risk is obviously a big one.
If there’s something wrong or anybody loses money, you’re done for. That’s why it’s so hard to build a financial services business. If you’re building anything else and it breaks here or there, you can still fix or patch it. You don’t have that luxury when it comes to financial services products. There’s no Version 2.0.
Protect the integrity of the product. Because once that goes, it’s over.
What are the most important qualities you’re looking for when assembling a new team?
John Campbell: There’s a lot that you can do with technology. But what you can’t create with technology are things like emotion, heart, creativity, empathy, passion, drive, etc. In my opinion, those are the real qualities that matter.
I have an example that still chills me to this day. Years ago, I created a product which today is used by many people. But when we started out, I picked two companies to build the same product.
The one company looked better on paper in terms of the people, qualifications, and track record. The other company was better in terms of culture. It just felt like they bought into what I was trying to do. But they certainly were not the frontrunners in terms of credentials.
I could tell after three months which company was going to be best suited for the project. And the part that chills me to this day – had I picked the first company, the product would have been a failure.
What is your opinion about alternative asset classes?
John Campbell: The thing that puzzles me is how many big European and American funds rock up in Cape Town – like Van Riebeeck did – looking for opportunities with big bags of money.
These international investors see South Africa as a springboard to the rest of Africa. That tells you where the opportunities lie. These guys are not idiots; they’ve done their homework, read markets and have access to serious intel.
Alternative asset classes differ from traditional types; they are asset classes that aren’t stocks, bonds, or cash. They offer real opportunities and investors from overseas are seeing that also.
How do you invest during uncertain times?
John Campbell: From an investment point of view, I’ve always considered myself a fundamentalist. Diversification is a key investment strategy that prevents significant losses if one area of your portfolio takes a serious hit. But at the same time – what do uncertain times even mean?
This is my thought process: Uncertain times just mean that things have shifted. So, unless the earth has opened up and sucked us all in, it’s just that things have moved around or changed direction.
What are you looking for in an investment opportunity?
John Campbell: What I’m looking for is not so much an “investment opportunity” as an expert financial advisor who can identify excellent investment opportunities for me. By this, I don’t mean just watching tickets and algorithms, which I can do myself. I want to draw on the expertise of someone who I can trust to know where the action is. For me, the action is at a grassroots level, and I want to work with an investment advisor who fundamentally understands that space.
In a big way, that’s why the traditional investment options just don’t fit the mould anymore.
One really good example of that is a South African business around footwear and how they understood certain nuances about their customer. Suddenly, this is now a massive business. That’s the kind of insight that I’m talking about.
How do you determine if something is an opportunity or a fad?
John Campbell: It must resonate with my motto: For something to be considered a bona fide opportunity, it must make a true difference in real people’s lives. And here I’m talking about a tangible, positive difference. That, for me, is the best way to differentiate between a fad and a genuine opportunity, or something with substance.
When aiming to identify fads, there are specific indicators to watch out for. Often, there are stacks of followers in such a space. Big numbers, and tons of PR. Yet, it often doesn’t make sense from a business point of view. If someone is unable to provide a satisfactory explanation, in simple language, of how their product is going to make life better for real people, it’s a fad.
There are lots of great technical solutions out there looking for problems to solve, and obviously, blockchain has really been abused in that space, where the fad level is huge. So, that’s my simple principle: what is going to change, for whom, tomorrow?
What are some future trends to look out for?
John Campbell: I think there’s a lot of that activity happening at the moment. What we need to do is open our eyes to it, embrace it, and find mechanisms to make these new opportunities investable. COVID gave rise to numerous small businesses on township level – basic services like food delivery using bicycles or bikes. And now that the peak of COVID has passed, people tend to stick with those new businesses. Often, because it’s been hyper-segmented and customers are getting better value than they would from any big corporate.
Likewise, food security is going to become a big issue, because people have just about lost the ability to take care of themselves. There are massive opportunities around that. And I’m not even talking about the global effect of carbon emissions on agriculture.
There is one example from Rio, where people were basically starving. And now there’s been this massive increase in people growing their own food at home. It’s so simple, but a crisis was needed for this “grow your own food” culture to take hold. There are some great examples in South Africa, with companies like OfferZen that completely turned the entire recruitment model on its head.
People tend to think that everything that can be invented has already been conceived. That’s not entirely true.
How IFSA Can Help You Turn Opportunity Into Prosperity
When IFSA invests in a company, we do all the hard work. We do the math and make sure everything runs as it should. If you are looking for high-dividend growth, private equity could be an attractive investment option.
If you’d like to learn how the IFSA Private Equity team can help you make smarter investment decisions, book a free consultation here.
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